McEwen: 2015 Gold Supply Crunch Could Lead to $2,000 Gold

Release Date: 
Friday, December 26, 2014

Gold and Silver Prices

Gold prices recovered from earlier losses on speculation that China will increase its gold reserves to prop up its economy. “Gold advanced the most in more than two weeks amid speculation that China, the world’s biggest consumer, will take more measures to bolster the economy, boosting demand for the precious metal as a store of value. The People’s Bank of China plans to temporarily waive a requirement for lenders to set aside reserves for some deposits, people with knowledge of the matter said. Gold surged 70 percent from December 2008 to June 2011 as central banks increased money supply on an unprecedented scale…’Speculation that China will do more to support the economy is creating demand for gold,” George Gero, a precious-metal strategist at RBC Capital Markets in New York, said in a telephone interview. ‘At some point with all this money in the system, we could see some concern about inflation.’’ (“Gold Advances Most in Two Weeks on China Stimulus Speculation,” Bloomberg, 12/26/14.)

Gold finished the week up $1.60, closing at $1,196.80. Silver prices closed the week at $16.19, up $0.02.

McEwen: 2015 Gold Supply Crunch Could Lead to $2,000 Gold

The chairman and chief owner of McEwen Mining Inc., Rob McEwen, believes the projected curtailment of mining projects and reduced gold supply could lead to record gold prices in 2015.

“Rob McEwen, chairman and chief owner of McEwen Mining Inc. told Kitco News that he expects gold to reach US$2,000 an ounce by the end of 2015, with that figure linked to less supply on the horizon.

“’We’ve seen a lot of the gold that went into the ETFs and this hoarding that occurred from 2005 to 2011, a lot of it has come out,” McEwen said. “ETF gold was a multiple or two of annual production at certain points during that period, and that gold has come out of the ETFs and gone to Asia.

“’So, the next time gold runs, there’s not as much gold available,” he said. “The supply of gold has been curtailed both through cutbacks and development projects – so there’s going to be a gap in production that could be three to five years long before it’s properly addressed.”

Gold Prices to Rise in 2015: Dundee Chief Economist

Martin Murenbeeld, chief economist at Dundee Capital Markets and a closely watched gold commentator, sees higher gold prices in 2015.

“Murenbeeld thinks the gold market may be ‘finally turning’ and the price could overshoot on the upside as quoted in MiningMx:

‘We are more bullish than the actual numbers suggest, which results partly from the judgement that 2015 will see more financial and geopolitical fireworks.[..] crises present an unknown positive risk to the outlook: indeed it is very possible that the average gold price for 2015 will be higher than forecast (as happened in 2014) precisely because of the many crises looming on the horizon for 2015.’” (“Murenbeeld: Gold price to climb in 2015,”, 12/22/14.)

Russian Inflation To Exceed 10%; Credit Rating To Fall to “Junk” Status

Russia, one of the world’s largest consumers of gold, is facing the prospect of significant inflation in 2015.

Russia said its currency crisis was over on Thursday but warned that inflation is set to climb above 10 percent, adding to the problems facing President Vladimir Putin's government as it fights its worst economic crisis since 1998… Standard & Poor's credit ratings agency said this week it could downgrade Russia to junk as soon as January due to a rapid deterioration in ‘monetary flexibility…’

“Putin's economic aide Andrei Belousov said on Thursday that annual inflation could reach around 11 percent by the end of 2014 — surpassing the psychologically important 10 percent mark for the first time since the 2008-09 global financial crisis. Prices for some goods, such as beef and fish, have risen 40 to 50 percent in recent months after Russia slapped an import ban on certain Western food products in retaliation for European Union and U.S. sanctions over Ukraine.

“Bank officials say they saw a spike in withdrawals from ruble deposits in mid-December as Russians rushed to convert their savings into hard currencies.” (“As Ruble Settles, Inflation Becomes Russia's Next Big Problem,” Moscow Daily, 12/25/14.)

Cyber Attacks Against U.S. Government “Skyrocketing”

CNN reports the number of cyber attacks against U.S. government agencies is “unprecedented.”

“A CNN review of cyber attacks against federal agencies shows that the number of breaches into government systems is skyrocketing. ‘Espionage is happening at a rate we have never seen before,’ said Denise Zheng, a deputy director at the Center for Strategic and International Studies. The numbers seem to bear that out. There were almost 61,000 cyber attacks and security breaches across the entire federal government last year according to a recent Obama administration report.

“’This is a global problem. We don't have a malware problem. We have an adversary problem. There are people being paid to try to get inside our systems 24/7,’ said Tony Cole, vice president of the cyber security firm FireEye.” (“Government hacks and security breaches skyrocket,” CNN, 12/19/14.)

A December You’ll Remember—Call Now for Special Year-End Offers

While you search for the perfect gift for everyone on your list, Goldline is keeping you in mind with our year-end specials. This December, when you open a self-directed IRA with Goldline’s Express IRA® program, Goldline will cover your IRA fees for the first two years with free additional limited production bullion coins.* And, with every qualifying purchase of $10,000 or more of limited production, exclusive bullion coins, you will receive a $200 gift card to a popular national retailer.

In a season of giving, we strive to give a little more.

Call 866-867-4466 to learn more about Goldline’s December specials.

Limits and conditions:
• Limited time offer – qualifying purchases must be confirmed no later than December 31, 2014 at 6pm PST.
• This offer is not available to current or former Goldline employees. This offer may not be combined with Goldline’s Price Guarantee Programs or Price Shield℠.

*Coins are valued at their ask price

*Federal IRA tax laws are complex and may change from year to year. Goldline believes it is appropriate to have 5%-20% of retirement portfolio allocated to precious metals. Other individuals and institutions may recommend different percentages. As with any investment, you should consult your tax advisor before making a decision regarding precious metals IRA investments.

Goldline provides a wrap-up of the week's precious metals news along with important commentary on the American Advisor Week in Review audio program.

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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